Ecuador Eyes Levying Taxes On Online Gaming

Gambling has been illegal in Ecuador since 2011 but President Guillermo Lasso is keen to tax online gaming companies domiciled abroad

Gambling has been illegal in Ecuador since 2011, while the government is keen to levy taxes on online gaming companies domiciled abroad.
July 12, 2022 | 09:50 AM

Quito — Gambling has been banned in Ecuador since 2011, something that visitors to the country find surprising.

“It’s as if they banned liquor or tobacco, a tourist told me,” mountain guide Ramiro Garrido relates. “When they ask about that issue, I just tell them that several years ago there was a vote in the country and the law was changed, but it is complicated.”

On May 7, 2011 a plebiscite was held, proposing the prohibition of businesses dedicated to gambling, such as casinos and gambling halls, and in which 52% of voters came out in favor of the prohibition, while 48% were against it.

The plebiscite was the initiative of former president Rafael Correa, who governed from 2007 to 2017, proposing a “more healthy” atmosphere for young people and to avoid workers losing their salaries in gambling.


Then foreign minister Ricardo Patiño also backed Correa’s proposal, adding that prohibiting gambling would close the door on money laundering, an activity that many casinos are accused of engaging in.

Article 236 of the penal code, in force since 2014, establishes that “any person who manages, operates or establishes casinos, gambling halls, betting shops or businesses dedicated to gambling shall be punished with imprisonment of one to three years”.

However, gambling was once a thriving industry, with 160 gambling establishments that employed around 25,000 people, according to the now defunct national association of owners and managers of gambling halls (Anpasju).


Legal loopholes

The gaming industry is now purely online, with the current proliferation of betting websites, but which operate from outside the country, and therefore do not violate Ecuadorian laws, despite the fact there are physical offices where players can go to pay or collect their winnings.

And there are also cases of betting companies involved in sports sponsorship, such as BetCris, which is the main sponsor of the national soccer league championship, and has an agreement with Uruguayan TV channel GolTV, owner of the broadcasting rights of the soccer championship. However, until January 2022, GolTV owed the LigaPro clubs around $13 million, a debt that was resolved due to its agreement with BetCris, and which is being paid back in installments until June 2023.

Other bookmakers, such as Bet593, are also sponsors of local soccer teams.

Online gaming companies are exempt from paying taxes in Ecuador due to their non-domiciled status in the country, but this arrangement may change, with President Guillermo Lasso having warned that he would find a mechanism to levy taxes on such companies.

“They are domiciled abroad but have big business in Ecuador, and it cannot be that they do not pay taxes,” he has said, although no progress has been made so far in modifying such companies’ tax status.